10-QPeriod: Q3 FY2016

Bank of New York Mellon Corp Quarterly Report for Q3 Ended Sep 30, 2016

Filed November 8, 2016For Securities:BKBK-PKBNYBNY-PK

Summary

The Bank of New York Mellon Corporation (BK) reported solid performance for the third quarter of 2016, with net income applicable to common shareholders increasing to $974 million, or $0.90 per diluted common share, compared to $820 million, or $0.74 per diluted common share, in the same quarter of the prior year. This growth was driven by increases in key fee-based businesses, including investment services and investment management fees. Assets under custody and/or administration (AUC/A) and assets under management (AUM) both saw healthy year-over-year increases of 7% and 6% respectively, reflecting higher market values. Net interest revenue also improved, driven by strategic asset management and higher market interest rates, with the net interest margin (FTE) expanding to 1.06% from 0.98% in the prior year quarter. Key events during the quarter included the issuance of $1 billion in preferred stock and a 12% increase in the common stock dividend, signaling a commitment to returning capital to shareholders. Management highlighted ongoing investments in risk management and regulatory compliance. While the company noted the potential impact of issuing additional debt to satisfy resolution plan requirements, the overall financial results demonstrate continued operational strength and a focus on client value.

Financial Highlights

37 data points
Beta

Net Income

$987.00M

EPS (Diluted)

$0.90

Total Assets

$374.11B

Cash & Equivalents

$4.96B

Free Cash Flow

-$51.00M

Financial Statements
Beta
Interest Expense$100.00M
Net Income$987.00M
EPS (Basic)$0.90
EPS (Diluted)$0.90
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Net income applicable to common shareholders rose to $974 million ($0.90/share) from $820 million ($0.74/share) in Q3 2015.
  • 2Assets Under Custody/Administration (AUC/A) increased 7% year-over-year to $30.5 trillion.
  • 3Assets Under Management (AUM) increased 6% year-over-year to $1.72 trillion.
  • 4Investment services fees grew 2% year-over-year to $1.89 billion.
  • 5Investment management and performance fees increased 4% year-over-year to $860 million.
  • 6Net interest revenue increased 2% year-over-year to $774 million, with Net Interest Margin (FTE) improving to 1.06%.
  • 7Noninterest expense decreased 1% year-over-year to $2.64 billion.
  • 8BNY Mellon increased its quarterly cash dividend on common stock by 12% to $0.19 per share.

Frequently Asked Questions

Total fee and other revenue increased by 3% to $3.15 billion in the third quarter of 2016 compared to $3.05 billion in the third quarter of 2015. This increase was primarily driven by higher investment and other income, investment management and performance fees, and issuer services fees, partially offset by lower financing-related fees.

Assets under custody and/or administration (AUC/A) saw a 7% increase year-over-year, reaching $30.5 trillion as of September 30, 2016. Assets under management (AUM) also increased by 6% year-over-year to $1.72 trillion as of the same date. These increases were primarily attributed to higher market values, although partially offset by the unfavorable impact of a stronger U.S. dollar.

BNY Mellon's capital position remained strong. The CET1 ratio under the Advanced Approach was 10.5% at September 30, 2016, up from 10.2% at June 30, 2016. Similarly, the CET1 ratio under the Standardized Approach increased to 12.2% from 11.8%. The company also issued $1 billion of preferred stock and increased its common stock dividend by 12%, indicating a commitment to capital management and shareholder returns.

Net interest revenue increased to $774 million in the third quarter of 2016 from $759 million in the third quarter of 2015. This improvement was primarily attributed to strategic actions to reduce lower-yielding interest-earning assets and higher-yielding interest-bearing deposits, as well as the impact of higher market interest rates. The net interest margin (FTE) also improved to 1.06% from 0.98% year-over-year.